Introduction
The minimum wage for non-skilled workers is a complex and strenuous political and economic issue. This paper will examine the perspectives and priorities for involved stakeholders and how the conflicting views affect state legislation such as the H.B. 290 in Texas.
Center for Public Policy Priorities
The key argument for the Center for Public Policy Priorities is that minimum wage increases are an overdue measure to help working-class individuals and families. Since the cost of living has continued to rise over the years while wages stagnated, it creates a dangerous situation where Texas residents are faced with poverty despite having a full-time job and working diligently. The key objectives for a lobbyist for the organization would be to emphasize the numerous benefits to the working class while presenting arguments that changes will not be disruptive to the economy or businesses.
Texas is one of the few states that has not passed legislation increasing the minimum wage from the federally mandated $7.25. However, as of 2019, the living wage for a single adult is $11.03 an hour, and as much as $33.45 per hour with three kids. A living wage is necessary to afford essentials such as housing, food, and clothing. Furthermore, many industry workers that receive tips, which is a significant portion of the small business and restaurant industry, only receive a minimum wage of $2.13 an hour. Such a disparate gap is difficult, plunging families into poverty while businesses ultimately face high turnover rates such as 73% in hospitality (Waller, 2018). The opposition to the bill argues that the market will adjust accordingly, but it has not been over the decade since the minimum wage has been established in 2009. Furthermore, arguments that have criticized that such phasing in models such as in Seattle hurt workers is untrue according to the University of California-Berkeley’s Institute for Research on Labor and Employment which has seen significant increases in net wages in the most vulnerable wage brackets and decreased turnover while not having significant effects on a number of entry-level jobs or reduction in hours (Chen, 2017).
Lobbyists should provide research reports with appropriate facts and highlighting samples, emphasizing that the studies against minimum wage are focused on very limited or skewed samples. Testimony can be heard from minimum wage workers living in Texas describing the difficulties of working with such low wages compared to living standards. According to the organization’s research, over 2.4 million Texans or 1 in 4 workers would benefit from increases to the minimum wage to $10.10 an hour, a large majority of them being minorities or non-college-educated citizens. More than 60% would be of primes working age 25-54, with only 3.1% being teenagers, and more than 50% of the benefited population are from family households with children, including 14.7% of single mothers (Groves et al., 2015). The changes will have a sweeping positive effect to push a large portion of the population out of poverty and increase economic spending in various sectors.
Texas Restaurant Association
The restaurant industry opposes any national, state, or local legislation which forcefully or artificially increases minimum wage, even in stages (Texas Restaurant Association, 2019). The association agrees that the legislation does not reflect an economic reality that operates based on profits and available resources. An increase in minimum wage will result in the industry heavily investing in automation and reducing the number of entry-level jobs offered. Actions undertaken as part of the lobbying efforts on behalf of the Texas Restaurant Association would be to demonstrate the negative economic impact of the bill on the industry and general market forces as well as provide examples as to how similar initiatives have failed in other jurisdictions.
The restaurant industry employs the largest percentage of minimum wage workers; therefore, it will be the most affected if such is implemented. The majority of restaurants operate on various models which combine minimum wage alongside tipping. Restauranteurs value their workers and attempt to maintain competitive wages. Increasing minimum wages via mandatory legislation immediately increase payroll costs for restaurants by upward of 3%. While major fast-food chains can bear the cost, oftentimes small businesses operate at thin margins or even at a loss. Numerous associations and experts in the industry have argued that minimum wage increases result in restaurants having to reduce employee hours 64% of the time and eliminate jobs 43% of the time (Lucas, 2019). A study out of Seattle where the minimum wage was recently hiked from an already respectable $13 hour to $15, a 3.1% net increase, resulted in employee hours being cut, decreasing employee incomes by as much as $179 on average. Even with wage increases, net losses average 6.6% for workers, and despite having higher hourly rates, the minimum wage workers in Seattle lagged behind neighboring regions (Higgins, 2017). Lobbyists can bring in small business owners and restauranteurs for testimony before legislators, providing both empirical data and anecdotal evidence underlining the hard choices they will have to make with minimum wage hikes.
Multiple states have implemented legislation in recent years for gradual increases to minimum wage, which provides both objective and anecdotal data on its effectiveness. The biggest argument which favors raising minimum wages suggests that it reduces poverty and addresses income inequalities. Since minimum wage workers are typically unskilled labor working hourly jobs, these are commonly families who are at the lower end of the income spectrum. However, statistically, there is a weak correlation between low-wage workers and low-income families, due to the nature of hourly workers such as part-time, teenagers, or temporary jobs. With projected increases in the federal minimum wage, only 18% of income would reach poor families (Salmon, 2017). Meanwhile, a study from the University of California Irving found that artificially increasing minimum wages raise poverty levels in disadvantaged neighborhoods, actually growing poverty and government dependence 3% per $1 wage increase (Lawler, 2018). Unlike many other studies on the issue, this research provided a long-term 4-decade examination, assessing changes after the short-term economic growth which may occur, but then falls off significantly as other aftereffects mentioned earlier such as price hikes are unavoidable. A lobbyist can provide reports and statistics to back up this data and present it to the legislators arguing against this heavy-handed and ineffective approach to combatting poverty.
State Legislator
As a state legislator, one must consider both the interests of the businesses and economy and the interests of the everyday workers. This is a complex issue that requires the examination of empirical data and statistics, particularly in jurisdictions that have seen increases in minimum wages. While research is critical, practical data is seemingly more important. Furthermore, testimony from business owners and workers is essential to comprehending the human element in this decision. Furthermore, it is important to consider the national trend which is spreading across the states, including many Republican and conservative states of gradually increasing the minimum wage, with a potential federally mandated increase coming as well with upcoming elections.
The best approach would be to strike a balance between the two sides. It is evident that the mandated minimum wage is not nearly enough for a living wage in the state of Texas, so some increase is warranted. Currently, the HB 290 bill proposes a gradual increase in the minimum wage to $10.10 an hour by 2024 (Thompson, 2018). However, to spare small businesses, the hike can be mitigated in several ways. 1) State funds can be allocated to support small businesses in a transition period of up to 2 years if they do not cut entry-level jobs. 2) The gradual increase in minimum wages can be extended over a greater amount of years, to make the transition easier for businesses. If businesses have to raise prices to accommodate, they can do so more gradually as well. 3) Provide exemptions for small businesses with under 10 employees until 2024 as long as at least federal minimum wage is paid out alongside tips, with the assumption that internal wages will increase to remain competitive. These are proposed balanced solutions to amending the bill. The controversial nature of the minimum wage issue requires a practical approach that considers both sides of the argument, and legislators should view it as such; an opportunity to negotiate in the long-term.
References
Chen, M. (2017). No, Seattle’s $15 minimum wage is not hurting workers. The Nation. Web.
Groves, G., Lee, J., & Strandberg, K. (2015). It’s time to raise the minimum wage in Texas. Web.
Higgins, S. (2016). Study: Seattle’s minimum wage is hurting the poor. Washington Examiner. Web.
Lawler, J. (2018). Higher minimum wages increase poverty in poor neighborhoods, study finds. Washington Examiner. Web.
Lucas, A. (2019). Higher minimum wage means restaurants raise prices and fewer employee hours, survey finds. CNBC. Web.
Salmon, J. (2017). Minimum wage hikes fail to benefit low-income families. The Hill. Web.
Texas Restaurant Association. (2019). TRA members take to Capitol Hill. Web.
Thompson, S. (2018). HB 290. Web.
Waller, A. R. (2018). As most states raise their minimum wages, Texas refuses to budge. The Texas Tribune. Web.